Saudi Energy Minister Says Kingdom Is World’s Energy ‘Shock Absorber’
Oil prices have risen at the opening of trade Monday’s trading session after Saudi Arabia, the world's largest oil exporter, said it will take the adequate countermeasures to any sanctioning hinted. Later on, Saudi Energy Minister Khalid Al Falih said that the Kingdom remains committed as a key supplier to global energy.
A speculation loomed over the trading floor that prices could be affected by any move the Kingdom might take, but Falih's comments reassured stakeholders.
Added to the official and affirmative statements issued on the Kingdom responding more aggressively to any action taken against it, Falih reiterated that the Kingdom and world economies are closely tied to each other.
Oil prices would be "easily in the three-digit range" without Saudi Arabia's spare production capacity serving as a cushion for the market, he said
Beyond Saudi Arabia’s oil supply, the Kingdom plays a large role in global trade and investment and is home to projects that need to be funded in billions of dollars.
The minister said many factors could affect global oil prices, but Saudi Arabia and other major producers would continue to work to protect the market from any shocks.
"We expect and demand that Saudi Arabia's efforts be acknowledged," Falih said at the India Energy Forum by CERAWeek in New Delhi. "These supply disruptions need a shock absorber. The shock absorber has been to a large part Saudi Arabia."
He later told reporters on the sidelines that Saudi Arabia, which is currently producing about 10.7 million bpd, would raise its crude production next month.
Falih said Saudi Arabia has invested "tens of billions" of dollars to build its spare production capacity.
"Given the disruptions that have taken place, oil would be easily in the three-digit range had it not been for the extra efforts the Kngdom had done," Falih said.
"Saudi Arabia has proactively, deliberately and responsibly invested in its spare capacity."
The minister has said Saudi Arabia can produce 12 million bpd at will, and with current production around 10.7 million bpd, that leaves about 1.3 million bpd of spare capacity.
He said Saudi Arabia would act as "the central bank of the oil market" to help keep supply and demand in balance.
More so, several sources said last week that Saudi Aramco plans to supply Indian buyers with an additional 4 million barrels of crude in November.
India, the world's third-largest oil importer, is suffering from a combination of rising oil prices and a declining local currency. The retail price of gasoline and diesel in India is at record high levels and the government has been forced to cut fuel taxes to ease consumer burden.